Redrow hails return to pre-Covid profit levels

Redrow described a return to its “record” pre-Covid underlying profits in its final results on Wednesday, reporting a 10% improvement in revenue to £2.14bn.

The FTSE 250 housebuilder said its underlying profit before tax grew 31% year-on-year in the 53 weeks ended 3 July, to £410m, taking it back to its pre-pandemic record level of £406m in the 2019 financial year.

Its statutory profit before tax, meanwhile, fell to £246m from £314m a year ago, after exceptional fire safety costs of £164m.

Redrow described “strong” cash generation, with net cash at year-end on 3 July of £288m, up from £160m in July last year.

Its underlying return on capital employed was 24.54%, up from 18.53%, as the board hiked the final dividend by 19% to 22p, making for a total dividend for the year of 32p per share, up from 2021’s distribution of 24.5p.

Operationally, Redrow reported further progress in the land market, with around 6,000 plots added to its current land, and about 5,000 to its forward land.

“I am delighted to report a year of strong growth which has resulted in our underlying profits returning to the record levels achieved in 2019 prior to Covid,” said non-executive chairman Richard Akers.

“Excellent progress has been made during the year executing our strategy to grow in the regions.

“The new Southern business, based in Crawley, officially opened at the end of June but the team has been active in the land market for some time.”

Akers said the division was expected to make a positive contribution to profits in the current financial year.

The chairman added that at the end of this financial year, Redrow’s total land holdings stood at 67,400 plots, compared with 60,100 at the end of the 2019 period.

“Although the planning system is difficult at present, this gives us a strong pipeline of new outlets to continue our growth.

“Given rising inflation and higher interest rates it is not surprising the buoyant housing market has moderated recently and demand has returned to historically average levels.”

Richard Akers said it was on that basis the firm had prepared its medium-term plan, adding that it was “confident” its investment in land, combined with strong demand for its ‘Heritage’ homes, would support continued growth.

“In addition, our opening order book of over £1.4bn has put us in an excellent starting position for the 2023 financial year.

“As a result, the business is well placed to deliver another set of strong results.”

At 1146 BST, shares in Redrow were up 1.43% at 483p.

Reporting by Josh White at Sharecast.com.